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Larry’s Lawn Service needs to purchase a new lawnmower costing $8,406 to replace an old lawnmower...

Larry’s Lawn Service needs to purchase a new lawnmower costing $8,406 to replace an old lawnmower that cannot be repaired. The new lawnmower is expected to have a useful life of 5 years, with no salvage value at the end of that period.

(a) If Larry’s required rate of return is 10%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Annual cash savings should be? $

(b) If Larry’s required rate of return is 14%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Annual cash savings should be ?$

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ekkarill92 answered 1 year ago
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